Posts tagged ‘House Prices’
The booming property market looks set to pause for breath in 2015 with house prices dipping by 0.8 per cent, it was predicted today.
Property values are set to increase by 7.8 per cent this year, but the housing market is now at a turning point and prices will slip next year, the Centre for Economics and Business Research said.
The change in the market will be more marked in London, where the group expects prices to slide by 2.6 per cent, following a rise of 17.1 per cent this year.
Cebr blamed the predicted slide on a combination of tougher lending criteria introduced under the Mortgage Market Review, concerns about future interest rate rises and uncertainty caused by the General Election and the threat of a future mansion tax.
But it stressed that it was not anticipating a house price crash, saying the market was simply adjusting following its strong performance at the beginning of this year.
House prices are expected to resume their upward trend in 2016, with Cebr pencilling price growth of 2.6 per cent for that year, followed by annual gains of between 2.7 per cent and 3.4 per cent for the years 2017 to 2020.
It expects the London market to continue to outperform the rest of Britain, with property prices in the capital forecast to rise by 4.7 per cent in 2016, followed by annual growth of between 5.7 per cent and 6.5 per cent in the following four years.
Scott Corfe, head of macroeconomics at Cebr, said: “Tougher mortgage eligibility criteria, high deposit requirements and concerns about future rate rises are starting to take steam out of the UK housing market.
“But the risks should not be exaggerated – the price falls forecast for next year will be modest and we shouldn’t be too worried about this – we are not anticipating a crash.
“The market is adjusting after getting ahead of itself at the start of 2014.”
Cebr said leading indicators already pointed to price declines in the capital, with enquiries from new buyers falling and homes staying on the market for longer before they sold.
It added that affordability had also become an issue in London, with prospective buyers starting to baulk at the higher prices being demanded by sellers.
At the same time, there is likely to be a fall in demand from overseas buyers, as London property prices are now above their pre-crisis peaks in both US dollar and euro terms, making property in the capital less attractive to overseas investors.
Douglas McWilliams, executive chairman at Cebr, said: “The London housing market is being hit by a double whammy of reduced domestic and overseas demand.
“Sterling appreciation since the start of 2013 means that London property is no longer as attractive an investment as it was a few years ago.
“In addition, fears of a future mansion tax are eroding the UK’s international safe haven status. This will bring down prices at the top end of the capital’s housing market.”
House prices dipped by 0.2 per cent in September as the booming property market continued to show signs of cooling, figures revealed today.
The slide, which followed 16 consecutive months of price rises, left the average British home costing £188,374, 2 per cent higher than the pre-correction peak.
The annual pace of house price growth also moderated, easing to 9.4 per cent, down from 11 per cent in August, according to Nationwide Building Society.
The figures are in line with other data which suggests the property market is beginning to slow as buyers become more cautious in the face of future interest rate rises and the high prices being demanded by sellers.
The Bank of England yesterday said the number of mortgages approved for house purchase fell for the second month in a row during August.
Robert Gardner, Nationwide’s chief economist, said: “Price growth may soften further in the final quarter of the year, given the high base for comparison from Q4 2013.
“However, the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust.”
House prices rose in all 13 regions of Britain during the year to the end of September.
London continued to see the strongest annual growth, with property prices in the capital soaring by 21 per cent to stand at an average of £401,072, 31 per cent higher than their 2007 peak.
Annual gains were also strong in the Outer Metropolitan at 14.4 per cent, and the Outer South East and East Anglia at 13.2 per cent and 11 per cent respectively.
But there continues to be a considerable north/south divide, with prices in the North rising by just 4.3 per cent during the past year, while in Wales they edged up by 5 per cent and in Scotland they were 5.2 per cent higher.
Average house prices in the south of England, which encompasses London, the South East, South West and East Anglia, were up 15.3 per cent year-on-year.
But in northern regions of England, property values rose by an average of just 6.7 per cent.
Nationwide said house price growth in the south has exceeded gains in the north for the past 22 quarters.
However, there was a significant slowdown in the pace of gains in London during the three months to the end of September, with prices rising by just 0.9 per cent during the period.
East Anglia led the way in the third quarter with a gain of 3 per cent, followed by Northern Ireland at 2.9 per cent and the West Midlands at 2 per cent.
At the other end of the scale, prices fell by 2.1 per cent in the North in the three months to the end of September, while they dipped by 0.8 per cent in Wales.
Matthew Pointon , property economist at Capital Economics, said despite the recent fall in demand from potential buyers, he still expected housing market activity to pick up in the next few months.
He said: “More homes should come onto the market as potential sellers’ expectations about future increases in the value of their current property moderate and, alongside the return of real earnings growth, that should tempt buyers back.
“We therefore expect the number of buyers and sellers to be more-or-less matched, which implies house prices are set for a prolonged period of much more moderate growth than that seen over the past 18 months.”
The rate at which people think house prices will rise has eased to a 13-month low as consumers brace themselves for higher borrowing costs, research showed today.
The Knight Frank Markit House Price Sentiment Index fell to 69.2 in September, its lowest level since August last year.
The figure was also well down on the peak of 75.1 reached in May, although at above 50 it indicates that people still expect house prices to rise, albeit at a slower rate.
The groups said the prospects of higher borrowing costs next year, tougher rhetoric from policymakers and stretched affordability in areas that have seen strong price gains were causing households to reign in their price growth expectations.
The index first started to ease in June, and the trend has continued during the summer.
Overall, only 46 per cent of people expected the price of their home to increase during the coming year, the first time the level has fallen below 50 per cent in 2014.
Grainne Gilmore, head of residential research at Knight Frank, said: “House prices are rising across the UK, but our index signals a continuing slow-down in the pace of growth.
“The strengthening economy, job creation and low base rate are helping underpin property values, but there are signs that households across the board are becoming more circumspect about the scale of price growth they expect.”
Households across the country thought the value of their property increased in September, but the rate of growth was the slowest recorded for eight months.
Just under 27 per cent of people thought the value of their home had increased during the month, while 5.5 per cent said it had fallen.
People in all regions of Great Britain thought house prices rose in September, with those in London reporting the strongest gains, followed by people in the South East and East.
Households in the South East were most optimistic that property values would continue to increase in the coming 12 months, with people in London and the West Midlands also upbeat.
The survey adds to growing evidence that the property market is beginning to slow down as buyers become more cautious in the face of recent house price gains and future hikes to the cost of borrowing.
At the same time, the number of homes being put up for sale has increased, easing the mismatch between supply and demand and reducing the upward pressure on prices.
The Council of Mortgage Lenders yesterday reported mortgage advances fell during August for the first time since February.
House prices raced ahead by nearly 2 per cent in July as the property market showed little sign of slowing down, Government figures revealed today.
The average cost of a UK home jumped by 1.6 per cent during the month to stand at £272,000, according to the Office for National Statistics.
The rate at which prices are rising also accelerated to stand at 11.7 per cent for the 12 months to the end of July, up from an annual rate of 10.2 per cent in June.
London continued to be the driving force of the property market, with house prices in the capital increasing by 19.1 per cent during the year.
Growth was also strong in the South East and East, with these regions posting gains of 12.2 per cent and 10.6 per cent respectively.
But the London house price boom is continuing to spread to other regions of the UK, with the North East, North West, East Midlands, West Midlands, South West, Wales and Scotland all posting annual growth of more than 7 per cent.
The gains were enough to push property values in the East Midlands, West Midlands and South West up to record levels.
These regions now join London, the South East and the East in having average house prices that have passed the peak reached before the financial crisis struck.
In London, house prices are now nearly 40 per cent higher than they were before the property market correction, while across the UK as a whole, prices are 11.4 per cent higher.
Property price gains were more subdued in North Ireland and Yorkshire and the Humber, with prices in these regions rising by only 4.5 per cent and 5 per cent respectively during the past year.
The ONS data is slightly at odds with other housing market surveys that had indicated the property market was starting to slow down as buyers balked at high asking prices and more homes came on to the market.
Halifax reported that house prices edged ahead by just 0.1 per cent in August, although this followed a strong gain in July.
Jonathan Harris, of mortgage brokers Anderson Harris, said: “ONS house prices tend to be more historic than the other indices, revealing that there was no cooling in the housing market in July with house prices continuing to increase strongly.
“However, since then the temperature has definitely dropped as growing uncertainty – both with regard to the political climate and interest rates – takes the wind out of prospective buyers’ sails.”
Hardworking families in London are being provided with ‘tens of thousands’ of new homes, the Government’s housing minster has exclusively told Zoopla.
Brandon Lewis, who was appointed to the Government post earlier this year, insisted affordable homes are being provided for those wanting to live and work in the capital.
His comments come in the same week that the Government’s flagship Help to Buy scheme was deemed ‘a flop’ by the opposition – particularly for those hoping to buy in London.
Housing Minister Brandon Lewis said: “Everyone has the right to live in a safe and affordable home. This Government has worked tirelessly to make that possible and fix the broken housing market we inherited from the last Government.
“Our current affordable homes programmes is on track to deliver 170,000 new homes by 2015, to be followed by a further 165,000 by 2018, which will be the fastest rate of affordable house building for 20 years.
He claimed the Government’s Help to Buy scheme, which helps those with a small deposit to buy a home, was a key element in helping people onto the property ladder.
“Our Help to Buy scheme has enabled over 40,000 aspiring households to buy their first home with a fraction of the deposit they would normally require, and our action to cut the deficit has kept interest rates low and mortgages more affordable,” he said.
“And in London Help to Buy equity loans have allowed over 1,400 people to get a foot on the housing ladder. We have also increased discounts for council tenants looking to exercise their Right to Buy and have introduced new housing zones to boost house building and create tens of thousands of new homes for hardworking families across the capital.
However, he admitted that more need to be done to improve the property market. As well as struggling to save for a deposit, many home buyers are unable to keep up with the sharp rise in house prices, particularly in London.
The typical value of a home in Britain has increased almost £18,000 in the past year to £275,721, while in London they have risen by more than £60,000, according to Zoopla.
Lewis said: “The sector is clearly moving in the right direction, but there is still more to do, and improving the housing market will continue to be a vital part of our long-term economic plan,” he said.